HSBC Completes RMB Cross-border Intra-group Two-way Lending in China
HSBC said that it has become the first foreign bank in mainland China to successfully complete a two-way cross-border renminbi (RMB) lending transaction under a new pilot programme in Kunshan. The transaction was completed for Kunshan President Enterprises Food Company, a subsidiary of Uni-President Group.
The city of Kunshan, in Jiangsu Province, was approved by regulators in August to launch a series of cross-border RMB pilots via its ‘Kunshan Deepen Cross-Strait Industrial Cooperation Experimental Zones’, which includes RMB cross-border intra-group two-way lending for Taiwanese corporates in the zone.
“The cross-border RMB pilot programmes in Kunshan will further enhance RMB usage offshore and encourage RMB flow between onshore and offshore markets,” said Helen Wong, deputy chairman, president and chief executive officer (CEO) of HSBC China.
“Two-way cross-border RMB lending enables corporates to utilise their onshore and offshore RMB funds more efficiently with better flexibility, optimise allocation of intra-group RMB funds, reduce external borrowing, and improve returns on capital.”
HSBC China has set up a master account for cross-border RMB two-way lending for Kunshan President, a prominent Taiwan-invested company in Kunshan, and helped it obtain regulatory approval for an intra-group two-way lending quota totalling RMB 1.49bn. The first cross-border transaction has been completed, with RMB10m transferred to this master account from its related overseas company.
Since its entry into mainland China in 1992, Uni-President Group has invested in around 50 companies, predominantly in the food industry. The company posted revenues totaling RMB21.4bn in 2012, and has a strong demand for RMB funds.
As part of the pilot zone for industry cooperation between mainland China and Taiwan, a range of pilot projects for cross-border RMB services was approved in August. These include two-way RMB lending to facilitate cross-border RMB lending and borrowing at the inter-company level for the pilot zone’s Taiwanese companies which can now employ surplus funds to support business growth and better meet their expansion needs in the mainland. This innovative initiative will also make the establishment of cross-border RMB cash pools a feasible proposition.
At the same time, HSBC has also completed its first cross-border RMB remittance for individuals, another pilot initiative that has been approved for the Kunshan Experimental Zone. HSBC helped an overseas resident in the Kunshan Experimental Zone transfer his RMB income to his RMB account in Taiwan. This cross-border RMB remittance service, under the personal current account, provides greater convenience to mainland residents, Hong Kong/Macau and Taiwanese customers, as well as foreigners, in the pilot zone with cross-border remittance needs.